Cost

What is the cost baseline?

Input/Output a specific version of the time phased budget used to compare actual expenditures to planned expenditures to determine if preventive or corrective action is needed to meet the project objectives.

What is ab activity cost estimate?

Input/Output the likely costs of the resources required to complete the activities. The cost estimates can include labor, materials, equipment, services, facilities, information technology, and a contingency allocation.

Describe the control costs process

Process Group: Monitoring & Controlling Knowledge Area: Project Cost Management Description: Monitors the status of the project to update the project budget and manages changes to the cost baseline. outputs: -work performance information -cost forecasts -change requests -project management plan updates -project documents updates -organizational process assets updates

Describe the determine budget process

Process Group: Planning Knowledge Area: Cost Description: Aggregates the estimated costs of individual activities or work packages to establish an authorized cost baseline. Outputs: -cost performance baseline -project funding requirements -project documents updates

Describe the plan cost management process

Process Group: Planning Knowledge Area: cost Description: establishes the policies, procedures, and documentation for planning, managing, expending, and controlling cost. Output: -cost management plan

what is funding limit reconciliation?

Tool/technique expenditure of project funds is reconciled with the funding limits set by the customer or performing organization on the disbursement of funds for the project.

What is cost performance index (CPI)?

a comparison of the earned value (EV) and the actual cost (AC). a cost performance index of 1 indicates the project is on budget. a cost performance index greater than 1 indicates the project is under budget. A cost performance index is less than 1 indicates the project is over budget. formula: CPI=EV /AC

what is the to-complete performance index (TCPI)?

a comparison of the work remaining, as calculated by the budget at completion (BAC) minus the earned value (EV), to the funds remaining, as calculated by the budget at completion (BAC) or estiate at completion (EAC) minus the actual cost (AC) a TCPI greater than 1 indicates there is more work remaining than funding. A TCPI less than 1 indicates that there is more funding than there is work remaining. formulas: TCPI= (BAC-EV)/(BAC-AC) TCPI=(BAC-EV0/(EAC-AC)

what is contingency?

a provision in the project management plan to mitigate cost and/or schedule risk. determines by assessing known risks (known-unknown) and managed by the project management. Included in the cost baseline.

what is management reserve?

allocated funding at the project level to compensate for major scope changes, usually not included in the cost baseline and not accessible to the project manager without sponsor approval.

What is a phased estimate?

allows use of ROM or approximate estimates for some later work (also called "rolling wave" or "moving window") accuracy can be approximately: near term +/-5%, future +/-35%

what is definitive estimate?

based on detailed information for each work package in the WBS. Accuracy can be approximately: -5% to +10%

what is a rough order of magnitude (ROM) estimate?

it is made early in the project with minimal detailed information for example, a project in the initiation phase may have a rough order of magnitude (ROM) estimate in the range of -25% to +75%. Later in the project, as more information is known, definitive estimates could narrow the range of accuracy to -5% to +10%.

describe the estimate cost process

process group: planning knowledge area: cost description: the process of developing an approximation of the monetary resources needed to complete project activities outputs: -activity cost estimates -basis of estimates -project documents updates

What is planned value (PV)

the authorized budget assigned to the work that will be accomplished as of the status date. The total PV of the project is equivalent to the budget at completion (BAC).

What is cost variance (CV)?

the difference between the earned value (EV) and the actual cost (AC) as of the status date. a cost variance of 0 indicates the project or component is on a budget. a negative cost variance (less than 0) indicates the project or component is over budget, A positive cost variance (greater than 0) indicates the project or component is under budget. formula: CV=EV-AC

What is estimate to complete (ETC)?

the forecasted amount of funding required to complete the project as of the status date. formulas: ETC=New Estimate ETC=EAC -AC

What is estimated at completion (EAC)?

the forecasted amount of total project spend. Multiple calculations exist to determine EAC. Formulas: (bottom-up) EAC=AC+ETC (noted atypical variance) EAC=AC + BAC- EV 9noted typical variance) EAC=BAC/CPI

What is the budget at completion (BAC)?

the planned project spend upon completion of the project.

what is earned value (EV)?

the value of the work already performed on the project. EV is calculated by multiplying the budget at completion (BAC) by the percentage complete.

What is parametric cost estimating?

tool.technique an estimating technique that uses a statistical relationship between historical data and other variables to calculate an estimate for activity cost and budget. example: the team lunch was $20 per person for the previous project. There will be 10 people attending the lunch for this project. Therefor the parametric estimate is $200 for the team lunch.

What is cost of quality?

tool/technique a method of determining the costs incurred to ensure quality. Prevention and appraisal costs (cost of conformance) include cost for quality planning, quality control (QC), and quality assurance to ensure compliance to requirements (i.e., training, QC systems, etc. ) Failure costs (cost of non-conformance) include costs to rework products, components, or processes that are non-compliant, costs of warranty work and waste, and loss of reputation.

what is bottom-up cost estimating?

tool/technique a method of estimating a component of work. the work is decomposed into more detail. an estimate is prepared of what is needed to meet the requirements of each of the lower, more detailed pieces of work, and these estimates are then aggregated into a total quantity for the component of work. the accuracy of bottom-up estimating is driven by the size and complexity of the work identified at the lower levels.

What is a three-point cost estimate?

tool/technique an analytical technique that uses three cost estimates to represent the optimistic, most likely, and pessimistic scenarios. This technique is applied to improve the accuracy of the estimates of cost when the underlying activity or cost component is uncertain. cost estimate= (0+4(M) + P)/ 6

what is analogous cost estimating?

tool/technique an estimating technique that uses the cost from a previous, similar project as the basis for estimating the current project. frequently used when there is a limited amount of detailed information about the project such as in the early phases of the project. generally less costly and time consuming than other techniques, but it is also generally less accurate. uses historical information and expert judgment. considered top-down.

what is a reserve analysis (cost)?

tool/technique an ongoing process that establishes a reserve for the budget, estimated cost, or funded for a project based upon the remaining level of project uncertainty.

What is cost aggregation?

tool/technique using the WBS, costs are aggregated by work packages, which are then aggregated for the higher component levels of the WBS. All components levels will be aggregated for the entire project cost budget.

What is actual cost (AC)?

total costs actually incurred and recorded in accomplishing work performed during a given time period for a schedule activity or work breakdown structure component. Actual cost can sometimes be direct labor hours alone, direct costs alone, or all costs including indirect costs.

What is budgetary estimate?

used to appropriate funds on a defined, periodic basis. accuracy can be approximately: -10% to +25%